Investor Relations

Press Release

ServisFirst Bancshares, Inc. Announces Results for Third Quarter of 2017

Company Release - 10/16/2017 4:01 PM ET

BIRMINGHAM, Ala., Oct. 16, 2017 (GLOBE NEWSWIRE) -- ServisFirst Bancshares, Inc. (NASDAQ:SFBS), today announced earnings and operating results for the quarter and nine months ended September 30, 2017.

THIRD QUARTER 2017 HIGHLIGHTS:

  • Net income of $25.3 million and diluted EPS of $0.47 for the third quarter of 2017, an increase of 21% year over year
  • Diluted EPS of $1.33 for the nine months ended September 30, 2017, a 19% increase year over year 
  • Loans and deposits increased 21% and 30%, respectively, for the quarter on an annualized basis
  • Loans and deposits increased 22% and 14%, respectively, year over year

Tom Broughton, President and CEO, said, “We continue to see strong loan and deposit growth throughout our southeastern footprint while continuing to increase our market share.”  Bud Foshee, CFO, stated, “We are pleased with our improvement in all key financial metrics in the quarter and are pleased that our ROAA exceeded 1.50% and our efficiency ratio reached 34% in the third quarter.”

FINANCIAL SUMMARY (UNAUDITED)          
(in Thousands except share and per share amounts)          
                      
On December 20, 2016, the Company effected a two-for-one split of its common stock in the form of a stock dividend.  All shares and per share information for prior periods in this release have been adjusted to give effect to this stock split. 
    Period Ending
September 30,
2017
 Period Ending June
30, 2017
 % Change
From Period
Ending June
30, 2017 to
Period Ending
September 30,
2017
 Period Ending
September 30,
2016
 % Change
From Period
Ending
September 30,
2016 to Period
Ending
September 30,
2017
 
QUARTERLY OPERATING RESULTS                   
Net Income $25,259  $24,164  5% $20,909  21% 
Net Income Available to Common Stockholders $25,259  $24,133  5% $20,909  21% 
Diluted Earnings Per Share $0.47  $0.45  4% $0.39  21% 
Return on Average Assets  1.55%  1.55%     1.39%    
Return on Average Common Stockholders' Equity  17.28%  17.36%     16.66%    
Average Diluted Shares Outstanding  54,099,672   54,100,604      53,879,328     
                      
YEAR-TO-DATE OPERATING RESULTS                   
Net Income $71,942         $59,741  20% 
Net Income Available to Common Stockholders $71,911         $59,718  20% 
Diluted Earnings Per Share $1.33         $1.12  19% 
Return on Average Assets  1.52%         1.43%    
Return on Average Common Stockholders' Equity  17.24%         16.60%    
Average Diluted Shares Outstanding  54,111,208          53,489,918     
                      
BALANCE SHEET                   
Total Assets $6,712,103  $6,329,599  6% $6,002,621  12% 
Loans  5,628,765   5,343,688  5%  4,631,822  22% 
Non-interest-bearing Demand Deposits  1,405,965   1,373,353  2%  1,269,726  11% 
Total Deposits  5,796,901   5,394,810  7%  5,081,128  14% 
Stockholders' Equity  590,213   567,086  4%  507,866  16% 

DETAILED FINANCIALS

ServisFirst Bancshares, Inc. reported net income and net income available to common stockholders of $25.3 million for the quarter ended September 30, 2017, compared to net income and net income available to common stockholders of $20.9 million for the same quarter in 2016.  Basic and diluted earnings per common share were $0.48 and $0.47, respectively, for the third quarter of 2017, compared to $0.40 and $0.39, respectively, for the third quarter of 2016.

Return on average assets was 1.55% and return on average equity was 17.28% for the third quarter of 2017, compared to 1.39% and 16.66%, respectively, for the third quarter of 2016.

Net interest income was $58.4 million for the third quarter of 2017, compared to $55.6 million for the second quarter of 2017 and $47.9 million for the third quarter of 2016.  The net interest margin in the third quarter of 2017 was 3.77%, flat from the second quarter of 2017 and an increase of 42 basis points from the third quarter of 2016.  The increase in net interest income on a linked quarter basis is attributable to a $206.5 million increase in average loans outstanding, a $24.7 million increase in non-interest-bearing deposits and a $22.3 million increase in average equity, together resulting in a positive mix change in our balance sheet.  The average yield on loans increased by six basis points to 4.66% and the average rate paid on deposits increased by eight basis points to 0.72% on a linked quarter basis.

Average loans for the third quarter of 2017 were $5.44 billion, an increase of $206.5 million, or 4%, over average loans of $5.23 billion for the second quarter of 2017, and an increase of $863.7 million, or 19%, over average loans of $4.58 billion for the third quarter of 2016.

Average total deposits for the third quarter of 2017 were $5.53 billion, an increase of $260.4 million, or 5%, over average total deposits of $5.27 billion for the second quarter of 2017, and an increase of $550.7 million, or 11%, over average total deposits of $4.98 billion for the third quarter of 2016.

Non-performing assets to total assets were 0.28% for the third quarter of 2017, an increase of five basis points compared to 0.23% for the second quarter of 2017 and an increase of 12 basis points compared to 0.16% for the third quarter of 2016.  Net credit charge-offs to average loans were 0.10%, a 15 basis point decrease compared to 0.25% for the second quarter of 2017 and a three basis point decrease compared to 0.13% for the third quarter of 2016.  We recorded a $4.8 million provision for loan losses in the third quarter of 2017 compared to $4.4 million in the second quarter of 2017 and $3.5 million in the third quarter of 2016.  The allowance for loan loss as a percentage of total loans was 1.04% at September 30, 2017 compared to 1.03% at June 30, 2017 and 1.05% at September 30, 2016.  In management’s opinion, the allowance is adequate and was determined by consistent application of ServisFirst Bank’s methodology for calculating its allowance for loan losses.

Non-interest income for the third quarter of 2017 was $4.8 million, flat with the third quarter of 2016.  Service charges on deposit accounts increased $100,000 while mortgage banking revenue decreased by approximately $134,000 in the third quarter of 2017 compared to the third quarter of 2016.  Credit card income was flat at $1.1 million due to higher accruals for awards during the third quarter of 2017 compared to the third quarter of 2016.

Non-interest expense for the third quarter of 2017 increased $1.3 million, or 7%, to $21.5 million from $20.2 million in the third quarter of 2016, and decreased $378,000, or 2%, on a linked quarter basis.  Salary and benefit expense for the third quarter of 2017 increased $1.4 million, or 13%, to $12.4 million from $11.0 million in the third quarter of 2016, and increased $397,000, or 3%, on a linked quarter basis.  Professional service expenses decreased by $377,000, or 32%, to $805,000 for the third quarter of 2017 compared to $1.2 million for the third quarter of 2016, a result of lower legal expenses.  Other operating expense for the third quarter of 2017 increased $507,000, or 10%, to $5.5 million from $5.0 million in the third quarter of 2016.

Income tax expense increased $3.4 million, or 42%, to $11.6 million in the third quarter of 2017, compared to $8.2 million in the third quarter of 2016.  We recognized excess tax benefits from the exercise and vesting of stock options and restricted stock of $757,000 in the third quarter of 2017, compared to $1.2 million in the third quarter of 2016.  Our effective tax rate for the third quarter of 2017 and 2016 was 31.5% and 28.1%, respectively.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures, including tangible common stockholders’ equity, total tangible assets, tangible book value per share and tangible common equity to total tangible assets, each of which excludes goodwill and core deposit intangibles associated with our acquisition of Metro Bancshares, Inc. in January 2015.  We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that these non-GAAP financial measures have a number of limitations.  As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies, including those in our industry, use.  The following reconciliation table provides a more detailed analysis of the non-GAAP financial measures as of and for the comparative periods presented in this press release.  Dollars are in thousands, except share and per share data.
               

   At September 30,
2017
 At June 30, 2017 At March 31,
2017
 At December
31, 2016
 At September
30, 2016
 
Book value per share - GAAP $11.14  $10.72  $10.32  $9.93  $9.65  
Total common stockholders' equity - GAAP  590,213   567,086   545,148   522,889   507,866  
 Adjustments:                     
 Adjusted for goodwill and core deposit intangible asset  14,787   14,855   14,924   14,996   15,073  
Tangible common stockholders' equity - non-GAAP $575,426  $552,231  $530,224  $507,893  $492,793  
Tangible book value per share - non-GAAP $10.86  $10.44  $10.04  $9.65  $9.37  
                       
Stockholders' equity to total assets - GAAP  8.79%  8.96%  8.60%  8.21%  8.46% 
Total assets - GAAP $6,712,103  $6,329,599  $6,336,165  $6,370,448  $6,002,621  
 Adjustments:                     
 Adjusted for goodwill and core deposit intangible asset  14,787   14,855   14,924   14,996   15,073  
Total tangible assets - non-GAAP $6,697,316  $6,314,744  $6,321,241  $6,355,452  $5,987,548  
Tangible common equity to total tangible assets - non-GAAP  8.59%  8.75%  8.39%  7.99%  8.23% 

About ServisFirst Bancshares, Inc.

ServisFirst Bancshares, Inc. is a bank holding company based in Birmingham, Alabama. Through its subsidiary ServisFirst Bank, ServisFirst Bancshares, Inc. provides business and personal financial services from locations in Birmingham, Huntsville, Montgomery, Mobile and Dothan, Alabama, Pensacola and Tampa Bay, Florida, Atlanta, Georgia, Charleston, South Carolina and Nashville, Tennessee.

ServisFirst Bancshares, Inc. files periodic reports with the U.S. Securities and Exchange Commission (SEC).  Copies of its filings may be obtained through the SEC’s website at www.sec.gov or at www.servisfirstbancshares.com.

Statements in this press release that are not historical facts, including, but not limited to, statements concerning future operations, results or performance, are hereby identified as "forward-looking statements" for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933.  The words "believe," "expect," "anticipate," "project," “plan,” “intend,” “will,” “would,” “might” and similar expressions often signify forward-looking statements. Such statements involve inherent risks and uncertainties. ServisFirst Bancshares, Inc. cautions that such forward-looking statements, wherever they occur in this press release or in other statements attributable to ServisFirst Bancshares, Inc., are necessarily estimates reflecting the judgment of ServisFirst Bancshares, Inc.’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements.  Such forward-looking statements should, therefore, be considered in light of various factors that could affect the accuracy of such forward-looking statements, including: general economic conditions, especially in the credit markets and in the Southeast; the performance of the capital markets; changes in interest rates, yield curves and interest rate spread relationships; changes in accounting and tax principles, policies or guidelines; changes in legislation or regulatory requirements; changes in our loan portfolio and the deposit base; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, economic stimulus initiatives; the cost and other effects of legal and administrative cases and similar contingencies; possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans and the value of collateral; the effect of natural disasters, such as hurricanes and tornados, in our geographic markets; and increased competition from both banks and non-bank financial institutions.  The foregoing list of factors is not exhaustive. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-looking Statements” and “Risk Factors” in our most recent Annual Report on Form 10-K and our other SEC filings. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained herein. Accordingly, you should not place undue reliance on any forward-looking statements, which speak only as of the date made.  ServisFirst Bancshares, Inc. assumes no obligation to update or revise any forward-looking statements that are made from time to time.

More information about ServisFirst Bancshares, Inc. may be obtained over the Internet at www.servisfirstbancshares.com  or by calling (205) 949-0302.

Contact: ServisFirst Bank
Davis Mange (205) 949-3420
dmange@servisfirstbank.com

SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)                    
(In thousands except share and per share data)                    
  3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016
CONSOLIDATED STATEMENT OF INCOME                    
Interest income $67,641  $63,538  $59,517  $56,200  $54,691 
Interest expense  9,245   7,971   7,465   7,091   6,773 
Net interest income  58,396   55,567   52,052   49,109   47,918 
Provision for loan losses  4,803   4,381   4,986   4,075   3,464 
Net interest income after provision for loan losses  53,593   51,186   47,066   45,034   44,454 
Non-interest income  4,790   4,805   4,546   6,039   4,791 
Non-interest expense  21,497   21,875   21,267   22,037   20,162 
Income before income tax  36,886   34,116   30,345   29,036   29,083 
Provision for income tax  11,627   9,952   7,826   7,298   8,174 
Net income  25,259   24,164   22,519   21,738   20,909 
Preferred stock dividends  -   31   -   24   - 
Net income available to common stockholders $25,259  $24,133  $22,519  $21,714  $20,909 
Earnings per share - basic $0.48  $0.46  $0.43  $0.41  $0.40 
Earnings per share - diluted $0.47  $0.45  $0.42  $0.40  $0.39 
Average diluted shares outstanding  54,099,672   54,100,604   54,133,722   53,961,160   53,879,328 
                     
CONSOLIDATED BALANCE SHEET DATA                    
Total assets $6,712,103  $6,329,599  $6,336,165  $6,370,448  $6,002,621 
Loans  5,628,765   5,343,688   5,151,984   4,911,770   4,631,822 
Debt securities  522,724   518,065   526,023   447,427   402,733 
Non-interest-bearing demand deposits  1,405,965   1,373,353   1,292,440   1,281,605   1,269,726 
Total deposits  5,796,901   5,394,810   5,361,532   5,420,311   5,081,128 
Borrowings  54,975   55,075   55,169   55,262   55,356 
Stockholders' equity $590,213  $567,086  $545,148  $522,889  $507,866 
                     
Shares outstanding  52,970,310   52,909,362   52,812,396   52,636,896   52,610,896 
Book value per share $11.14  $10.72  $10.32  $9.93  $9.65 
Tangible book value per share (1) $10.86  $10.44  $10.04  $9.65  $9.37 
                     
SELECTED FINANCIAL RATIOS                    
Net interest margin  3.77%  3.77%  3.53%  3.30%  3.35%
Return on average assets  1.55%  1.55%  1.45%  1.39%  1.39%
Return on average common stockholders' equity  17.28%  17.36%  17.09%  16.71%  16.66%
Efficiency ratio  34.02%  36.23%  37.58%  39.96%  38.25%
Non-interest expense to average earning assets  1.38%  1.47%  1.43%  1.46%  1.39%
                     
CAPITAL RATIOS (2)                    
Common equity tier 1 capital to risk-weighted assets  9.60%  9.72%  9.67%  9.78%  9.91%
Tier 1 capital to risk-weighted assets  9.61%  9.73%  9.68%  9.78%  9.92%
Total capital to risk-weighted assets  11.51%  11.67%  11.66%  11.84%  12.03%
Tier 1 capital to average assets  8.91%  8.88%  8.46%  8.22%  8.20%
Tangible common equity to total tangible assets (1)  8.59%  8.75%  8.39%  7.99%  8.23%
                     
(1) See "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" for a discussion of these Non-GAAP financial measures.
(2) Regulatory capital ratios for most recent period are preliminary.


CONSOLIDATED BALANCE SHEETS (UNAUDITED)          
(Dollars in thousands)          
    September 30, 2017 September 30, 2016 % Change 
ASSETS          
Cash and due from banks $79,431  $57,221  39 % 
Interest-bearing balances due from depository institutions  86,719   553,392  (84)% 
Federal funds sold  182,841   181,644  1 % 
 Cash and cash equivalents  348,991   792,257  (56)% 
Available for sale debt securities, at fair value  435,325   351,417  24 % 
Held to maturity debt securities (fair value of $89,329 and $26,912 at          
 September 30, 2017 and 2016, respectively)  87,399   51,316  70 % 
Restricted equity securities  1,038   5,668  (82)% 
Mortgage loans held for sale  4,971   6,026  (18)% 
Loans  5,628,765   4,631,822  22 % 
Less allowance for loan losses  (58,459)  (48,933) 19 % 
 Loans, net  5,570,306   4,582,889  22 % 
Premises and equipment, net  55,104   25,033  120 % 
Goodwill and other identifiable intangible assets  14,787   15,073  (2)% 
Other assets  194,182   172,942  12 % 
 Total assets $6,712,103  $6,002,621  12 % 
LIABILITIES AND STOCKHOLDERS' EQUITY          
Liabilities:          
Deposits:          
 Non-interest-bearing $1,405,965  $1,269,726  11 % 
 Interest-bearing  4,390,936   3,811,402  15 % 
  Total deposits  5,796,901   5,081,128  14 % 
Federal funds purchased  254,880   344,390  (26)% 
Other borrowings  54,975   55,356  (1)% 
Other liabilities  15,134   13,881  9 % 
 Total liabilities  6,121,890   5,494,755  11 % 
Stockholders' equity:          
 Preferred stock, Series A Senior Non-Cumulative Perpetual, par value $0.001          
  (liquidation preference $1,000), net of discount; no shares authorized,          
  no shares issued or outstanding at September 30, 2017 and 2016  -   -  - % 
 Preferred stock, par value $0.001 per share; 1,000,000 shares authorized and          
  undesignated at September 30, 2017 and 2016  -   -  - % 
 Common stock, par value $0.001 per share; 100,000,000 shares authorized;          
  52,970,310 shares issued and outstanding at September 30, 2017 and          
  52,610,896 shares issued and outstanding at September 30, 2016  53   53  - % 
 Additional paid-in capital  217,483   215,235  1 % 
 Retained earnings  371,127   287,568  29 % 
 Accumulated other comprehensive income  1,048   4,633  (77)% 
 Noncontrolling interest  502   377  33 % 
  Total stockholders' equity  590,213   507,866  16 % 
 Total liabilities and stockholders' equity $6,712,103  $6,002,621  12 % 


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)          
(In thousands except per share data)             
    Three Months Ended September 30, Nine Months Ended September 30, 
    2017 2016 2017 2016  
Interest income:             
 Interest and fees on loans $63,857 $51,598 $179,325 $148,055  
 Taxable securities  2,288  1,107  6,649  3,614  
 Nontaxable securities  729  823  2,246  2,515  
 Federal funds sold  379  347  1,185  630  
 Other interest and dividends  388  816  1,291  1,888  
 Total interest income  67,641  54,691  190,696  156,702  
Interest expense:             
 Deposits  7,574  5,358  19,877  14,352  
 Borrowed funds  1,671  1,415  4,804  4,362  
 Total interest expense  9,245  6,773  24,681  18,714  
 Net interest income  58,396  47,918  166,015  137,988  
Provision for loan losses  4,803  3,464  14,170  9,323  
 Net interest income after provision for loan losses  53,593  44,454  151,845  128,665  
Non-interest income:             
 Service charges on deposit accounts  1,467  1,367  4,203  3,980  
 Mortgage banking  978  1,112  2,941  2,681  
 Credit card income  1,149  1,114  3,517  2,159  
 Securities gains (losses)    -    -    -  (3) 
 Increase in cash surrender value life insurance  825  770  2,334  2,049  
 Other operating income  371  428  1,146  1,207  
 Total non-interest income  4,790  4,791  14,141  12,073  
Non-interest expense:             
 Salaries and employee benefits  12,428  10,958  36,172  32,758  
 Equipment and occupancy expense  1,947  2,100  6,452  6,108  
 Professional services  805  1,182  2,384  2,919  
 FDIC and other regulatory assessments  810  775  2,888  2,328  
 Other real estate owned expense  31  178  163  668  
 Other operating expense  5,476  4,969  16,580  14,175  
 Total non-interest expense  21,497  20,162  64,639  58,956  
 Income before income tax  36,886  29,083  101,347  81,782  
Provision for income tax  11,627  8,174  29,405  22,041  
 Net income  25,259  20,909  71,942  59,741  
 Dividends on preferred stock    -  -  31  23  
 Net income available to common stockholders $25,259 $20,909 $71,911 $59,718  
Basic earnings per common share $0.48 $0.40 $1.36 $1.14  
Diluted earnings per common share $0.47 $0.39 $1.33 $1.12  


LOANS BY TYPE (UNAUDITED)               
(In thousands)               
                 
   3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016
Commercial, financial and agricultural $2,223,910 $2,123,498 $2,061,503 $1,982,267 $1,885,315
Real estate - construction  467,838  395,398  345,777  335,085  292,721
Real estate - mortgage:               
 Owner-occupied commercial  1,323,383  1,272,659  1,262,578  1,171,719  1,138,308
 1-4 family mortgage  593,180  565,121  554,261  536,805  520,394
 Other mortgage  962,690  931,788  872,955  830,683  740,127
Subtotal: Real estate - mortgage  2,879,253  2,769,568  2,689,794  2,539,207  2,398,829
Consumer  57,764  55,224  54,910  55,211  54,957
Total loans $5,628,765 $5,343,688 $5,151,984 $4,911,770 $4,631,822


SUMMARY OF LOAN LOSS EXPERIENCE (UNAUDITED)                  
(Dollars in thousands)                  
     3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016 
Allowance for loan losses:                     
Beginning balance $55,059   $53,892    $51,893    $48,933   $46,998   
Loans charged off:                     
 Commercial, financial and agricultural  924    3,067    2,855    1,059   1,270   
 Real estate - construction  16    40    -    -   79   
 Real estate - mortgage  550    106    266    45   144   
 Consumer  65    33    75    82   81   
  Total charge offs  1,555    3,246    3,196    1,186   1,574   
Recoveries:                     
 Commercial, financial and agricultural  67    16    190    10   35   
 Real estate - construction  12    14    16    12   9   
 Real estate - mortgage  59    2    2    46   1   
 Consumer  14    -    1    3   -   
  Total recoveries  152    32    209    71   45   
 Net charge-offs  1,403    3,214    2,987    1,115   1,529   
 Provision for loan losses  4,803    4,381    4,986    4,075   3,464   
 Ending balance $58,459   $55,059   $53,892   $51,893  $48,933   
                         
 Allowance for loan losses to total loans  1.04 %  1.03  %  1.05  %  1.06 %  1.05 % 
 Allowance for loan losses to total average                     
  loans  1.07 %  1.05  %  1.08  %  1.10 %  1.07 % 
 Net charge-offs to total average loans  0.10 %  0.25  %  0.24  %  0.09 %  0.13 % 
 Provision for loan losses to total average                     
  loans  0.35 %  0.34  %  0.40  %  0.34 %  0.30 % 
 Nonperforming assets:                     
  Nonaccrual loans $12,356   $9,963    $12,084    $10,624   $6,647   
  Loans 90+ days past due and accruing  2,506    1,016    16    6,263   43   
  Other real estate owned and                     
    repossessed assets  3,888    3,891    5,102    4,988   3,035   
 Total $18,750   $14,870   $17,202   $21,875  $9,725   
                         
 Nonperforming loans to total loans  0.26 %  0.21  %  0.23  %  0.34 %  0.14 % 
 Nonperforming assets to total assets  0.28 %  0.23  %  0.27  %  0.34 %  0.16 % 
 Nonperforming assets to earning assets  0.29 %  0.24  %  0.28  %  0.35 %  0.16 % 
 Reserve for loan losses to nonaccrual loans  473.12 %  552.63  %  445.98  %  488.45 %  736.17 % 
                         
 Restructured accruing loans $12,700   $12,716    $536    $558   $6,738   
                         
 Restructured accruing loans to total loans  0.23 %  0.24  %  0.01  %  0.01 %  0.14 % 
                         
 TROUBLED DEBT RESTRUCTURINGS (TDRs) (UNAUDITED)              
 (In thousands)                 
     3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016 
 Beginning balance: $16,370   $7,269   $7,292   $6,738  $6,753   
  Additions  -    12,716    -    -   -   
  Removal from TDR  -    (535)   -    -   -   
  Net (paydowns) / advances  (16)   (1,380)   (23)   554   (15)  
  Charge-offs  -    (1,700)   -    -   -   
     $16,354   $16,370   $7,269   $7,292  $6,738   


CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)          
(In thousands except per share data)          
    3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016 
Interest income:                
 Interest and fees on loans $63,857 $59,912 $55,556 $52,533 $51,598 
 Taxable securities  2,288  2,274  2,087  1,604  1,107 
 Nontaxable securities  729  752  765  785  823 
 Federal funds sold  379  287  519  377  347 
 Other interest and dividends  388  313  590  901  816 
   Total interest income  67,641  63,538  59,517  56,200  54,691 
Interest expense:                
 Deposits  7,574  6,321  5,982  5,817  5,358 
 Borrowed funds  1,671  1,650  1,483  1,274  1,415 
   Total interest expense  9,245  7,971  7,465  7,091  6,773 
   Net interest income  58,396  55,567  52,052  49,109  47,918 
Provision for loan losses  4,803  4,381  4,986  4,075  3,464 
   Net interest income after provision for loan losses  53,593  51,186  47,066  45,034  44,454 
Non-interest income:                
 Service charges on deposit accounts  1,467  1,382  1,354  1,375  1,367 
 Mortgage banking  978  1,064  899  1,044  1,112 
 Credit card income  1,149  1,189  1,179  1,052  1,114 
 Increase in cash surrender value life insurance  825  785  724  745  770 
 Other operating income  371  385  390  1,823  428 
   Total non-interest income  4,790  4,805  4,546  6,039  4,791 
Non-interest expense:                
 Salaries and employee benefits  12,428  12,031  11,713  11,197  10,958 
 Equipment and occupancy expense  1,947  2,265  2,250  1,877  2,100 
 Professional services  805  808  771  1,058  1,182 
 FDIC and other regulatory assessments  810  1,081  997  1,072  775 
 Other real estate owned expense  31  56  76  91  178 
 Other operating expense  5,476  5,634  5,460  6,742  4,969 
   Total non-interest expense  21,497  21,875  21,267  22,037  20,162 
   Income before income tax  36,886  34,116  30,345  29,036  29,083 
Provision for income tax  11,627  9,952  7,826  7,298  8,174 
   Net income  25,259  24,164  22,519  21,738  20,909 
 Dividends on preferred stock    -  31  -  24  - 
   Net income available to common stockholders $25,259 $24,133 $22,519 $21,714 $20,909 
Basic earnings per common share $0.48 $0.46 $0.43 $0.41 $0.40 
Diluted earnings per common share $0.47 $0.45 $0.42 $0.40 $0.39 


AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS (UNAUDITED) 
ON A FULLY TAXABLE-EQUIVALENT BASIS 
(Dollars in thousands) 
  
                                    
      3rd Quarter 2017 2nd Quarter 2017 1st Quarter 2017 4th Quarter 2016 3rd Quarter 2016 
      Average Balance Yield /
Rate
 Average Balance Yield /
Rate
 Average Balance Yield /
Rate
 Average Balance Yield /
Rate
 Average Balance Yield /
Rate
 
Assets:                               
Interest-earning assets:                               
 Loans, net of unearned income (1)                               
  Taxable $5,407,109 4.66% $5,192,812 4.60% $4,976,933  4.50% $4,676,565 4.45% $4,554,900 4.47% 
  Tax-exempt (2)  33,357 5.17   41,143 4.92   27,322  4.72   26,344 4.74   21,939 4.37  
   Total loans, net of                               
    unearned income  5,440,466 4.66   5,233,955 4.60   5,004,255  4.51   4,702,909 4.45   4,576,839 4.47  
 Mortgage loans held for sale  4,862 3.51   5,958 3.90   5,637  4.10   6,271 3.36   6,724 3.79  
 Debt securities:                               
  Taxable  385,431 2.37   389,505 2.34   368,349  2.27   295,608 2.17   224,825 2.19  
  Tax-exempt (2)  131,478 3.34   133,590 3.38   132,578  3.45   134,748 3.54   135,272 3.73  
   Total securities (3)  516,909 2.62   523,095 2.60   500,927  2.58   430,356 2.60   360,097 2.77  
 Federal funds sold  111,175 1.35   98,598 1.17   234,460  0.90   242,211 0.62   217,158 0.64  
 Restricted equity securities  1,030 3.47   1,030 10.51   1,030  1.57   3,042 8.24   5,658 4.01  
 Interest-bearing balances with banks  118,510 1.27   109,909 1.04   295,648  0.80   601,143 0.55   590,675 0.51  
 Total interest-earning assets $6,192,952 4.37% $5,972,545 4.30% $6,041,957  4.03% $5,985,932 3.77% $5,757,151 3.81% 
Non-interest-earning assets:                               
 Cash and due from banks  65,457     68,894     59,697      55,593     58,809    
 Net premises and equipment  54,727     49,813     44,739      30,421     25,000    
 Allowance for loan losses, accrued                               
  interest and other assets  151,786     143,286     138,289      140,721     145,804    
   Total assets $6,464,922    $6,234,538    $6,284,682     $6,212,667    $5,986,764    
                                    
Interest-bearing liabilities:                               
 Interest-bearing deposits:                               
 Checking $800,437 0.42% $779,916 0.39% $789,273  0.38% $735,115 0.37% $696,100 0.37% 
 Savings  48,313 0.30   48,150 0.30   50,461  0.33   51,845 0.32   43,569 0.30  
 Money market  2,774,061 0.74   2,567,817 0.64   2,694,225  0.58   2,669,513 0.56   2,471,829 0.55  
 Time deposits  546,020 1.10   537,220 1.06   530,000  1.02   527,100 1.00   519,653 0.99  
  Total interest-bearing deposits  4,168,831 0.72   3,933,103 0.64   4,063,959  0.60   3,983,573 0.58   3,731,151 0.57  
 Federal funds purchased  282,806 1.34   336,344 1.11   359,747  0.86   353,029 0.63   436,415 0.64  
 Other borrowings  55,034 5.17   55,130 5.22   55,239  5.26   55,315 5.16   55,410 5.15  
 Total interest-bearing liabilities $4,506,671 0.81% $4,324,577 0.74% $4,478,945  0.68% $4,391,917 0.64% $4,222,976 0.64% 
Non-interest-bearing liabilities:                               
 Non-interest-bearing                               
  demand  1,363,207     1,338,514     1,254,496      1,289,448     1,250,139    
 Other liabilities  15,070     13,739     16,809      14,399     14,376    
 Stockholders' equity  578,626     556,521     535,232      514,245     494,248    
 Unrealized gains on securities and                               
  derivatives  1,348     1,187     (800)     2,658     5,025    
   Total liabilities and                               
    stockholders' equity $6,464,922    $6,234,538    $6,284,682     $6,212,667    $5,986,764    
Net interest spread    3.56%    3.56%    3.35%    3.13%    3.17% 
Net interest margin    3.77%    3.77%    3.53%    3.30%    3.35% 
                                    
(1)Average loans include loans on which the accrual of interest has been discontinued. 
(2)Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 35%. 
(3)Average net unrealized gains or losses on available-for-sale debt securities are excluded from the yield calculation. 

 

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Source: ServisFirst Bancshares, Inc.